Show Hide image

Waging war on low pay

A living wage can lift families out of poverty.

Living Wage Week begins on Monday 5 November. Trade unions, businesses, charities, universities and other organisations will come together to celebrate the living wage and to discuss further ways of promoting the campaign. The new, independently calculated rates for London and the UK will be announced and the latest list of accredited employers revealed.

Ed Miliband talked in his conference speech in Manchester about a “one-nation” economy, in which everyone has a stake and prosperity is fairly shared. Our government, employers, employees and civil society need to work together to build this. The living wage campaign gives us a perfect example of this principle in practice.

We are seeing impressive numbers of employers sign up. Far-sighted businesses are increasingly aware of the great benefits that come from paying a living wage. Studies by the Greater London Authority and Queen Mary, University of London found clear evidence that employers have benefited across a wide range of areas. Companies such as KPMG have seen higher worker morale, motivation and productivity and a reduction in staff turnover and absenteeism. By giving workers a fair deal for a day’s work, the living wage improves the relationship between employee and employer.

The Labour Party is also part of this movement. Rather than acting as a passive opposition, Labour councils across the country are leading the way in making a commitment to their staff, who play such a vital role in keeping local services running. It is not easy for local authorities to find the money in these tough times, but Labour councilors are showing that, even with less money around, it is our party that can advance the causes of fairness and social justice.

The campaign for a living wage is a powerful symbol of the kind of change that Labour wants to see in our economy. It is about offering people dignity in work, protecting the most vulnerable in society and laying the long-term foundations towards building a more stable economy and cohesive society.

Heavy lifting

A living wage can lift families out of poverty, helping them become less reliant on private debt or state benefits. For many hard-working people, this modest rise in their income can help stop the sleepless nights spent worrying about tomorrow’s meal or next month’s rent. A cleaner who had previously worked two jobs just to provide food for his family and pay the rent tells of how a living wage has allowed him to prioritise one job and also set up a youth group in his community.

But the campaign is also about the type of our economy we need to succeed. This coalition government believes that measures to erode workers’ rights and make it easier for employers to sack staff will support our economy. Labour’s vision is different from the Conservatives’ race-to-the-bottom approach.

We want to raise standards in our labour market, to create a route to a higher-skilled, higher-waged and higher productivity economy that delivers rising living standards and sustainable growth and expands opportunities for all.

The living wage helps protect those at the bottom now, while laying the road to a more sustainable and fair economy in the future. That is why Ed Miliband and the Labour Party will continue to champion this important cause.

Rachel Reeves is MP for Leeds West (Labour) and the shadow chief secretary to the Treasury

This article first appeared in the 05 November 2012 issue of the New Statesman, What if Romney wins?

Photo: Getty Images
Show Hide image

The Conservatives have failed on home ownership. Here's how Labour can do better

Far from helping first-time buyers, the government is robbing Peter to pay Paul

Making it easier for people to own their own first home is something to be celebrated. Most families would love to have the financial stability and permanency of home ownership. But the plans announced today to build 200,000 ‘starter homes’ are too little, too late.

The dire housing situation of our Greater London constituency of Mitcham & Morden is an indicator of the crisis across the country. In our area, house prices have increased by a staggering 42 per cent over the last three years alone, while the cost of private rent has increased by 22 per cent. Meanwhile, over 8200 residents are on the housing register, families on low incomes bidding for the small number of affordable housing in the area. In sum, these issues are making our area increasingly unaffordable for buyers, private renters and those in need of social and council housing.

But under these new plans, which sweep away planning rules that require property developers to build affordable homes for rent in order to increase the building homes for first-time buyers, a game of political smoke and mirrors is being conducted. Both renters and first-time buyers are desperately in need of government help, and a policy that pits the two against one another is robbing Peter to pay Paul. We need homes both to rent and to buy.

The fact is, removing the compulsion to provide properties for affordable rent will be disastrous for the many who cannot afford to buy. Presently, over half of the UK’s affordable homes are now built as part of private sector housing developments. Now this is going to be rolled back, and local government funds are increasingly being cut while housing associations are losing incentives to build, we have to ask ourselves, who will build the affordable properties we need to rent?

On top of this, these new houses are anything but ‘affordable’. The starter homes would be sold at a discount of 20 per cent, which is not insignificant. However, the policy is a non-starter for families on typical wages across most of the country, not just in London where the situation is even worse. Analysis by Shelter has demonstrated that families working for average local earnings will be priced out of these ‘affordable’ properties in 58 per cent of local authorities by 2020. On top of this, families earning George Osborne’s new ‘National Living Wage’ will still be priced out of 98 per cent of the country.

So who is this scheme for? Clearly not typical earners. A couple in London will need to earn £76,957 in London and £50,266 in the rest of the country to benefit from this new policy, indicating that ‘starter homes’ are for the benefit of wealthy, young professionals only.

Meanwhile, the home-owning prospects of working families on middle and low incomes will be squeezed further as the ‘Starter Homes’ discounts are funded by eliminating the affordable housing obligations of private property developers, who are presently generating homes for social housing tenants and shared ownership. These more affordable rental properties will now be replaced in essence with properties that most people will never be able to afford. It is great to help high earners own their own first homes, but it is not acceptable to do so at the expense of the prospects of middle and low earners.

We desperately want to see more first-time home owners, so that working people can work towards something solid and as financially stable as possible, rather than being at the mercy of private landlords.

But this policy should be a welcome addition to the existing range of affordable housing, rather than seeking to replace them.

As the New Statesman has already noted, the announcement is bad policy, but great politics for the Conservatives. Cameron sounds as if he is radically redressing housing crisis, while actually only really making the crisis better for high earners and large property developers who will ultimately be making a larger profit.

The Conservatives are also redefining what the priorities of “affordable housing” are, for obviously political reasons, as they are convinced that homeowners are more likely to vote for them - and that renters are not. In total, we believe this is indicative of crude political manoeuvring, meaning ordinary, working people lose out, again and again.

Labour needs to be careful in its criticism of the plans. We must absolutely fight the flawed logic of a policy that strengthens the situation of those lucky enough to already have the upper hand, at the literal expense of everyone else. But we need to do so while demonstrating that we understand and intrinsically share the universal aspiration of home security and permanency.

We need to fight for our own alternative that will broaden housing aspirations, rather than limit them, and demonstrate in Labour councils nationwide how we will fight for them. We can do this by fighting for shared ownership, ‘flexi-rent’ products, and rent-to-buy models that will make home ownership a reality for people on average incomes, alongside those earning most.

For instance, Merton council have worked in partnership with the Y:Cube development, which has just completed thirty-six factory-built, pre-fabricated, affordable apartments. The development was relatively low cost, constructed off-site, and the apartments are rented out at 65 per cent of the area’s market rent, while also being compact and energy efficient, with low maintenance costs for the tenant. Excellent developments like this also offer a real social investment for investors, while providing a solid return too: in short, profitability with a strong social conscience, fulfilling the housing needs of young renters.

First-time ownership is rapidly becoming a luxury that fewer and fewer of us will ever afford. But all hard-working people deserve a shot at it, something that the new Conservative government struggle to understand.